6. Japanese Organised Crime in Australia

History
and Characteristics of the Yakuza

Japanese crime groups are referred to by the Japanese National
Police Agency as the 'Boryokudan', which means 'the violent ones.'
Boryokudan has replaced the historical label of 'Yakuza,' a slang
term Japanese gang members gave themselves to depict an underdog
image. note#111

The official membership of Boryokudan groups in Japan is estimated
to be 88,300, but there may be as many as ten times that number
of other criminal associates. note#112
The Boryokudan wield enormous influence in Japan, and have penetrated
many aspects of Japanese life, reaping substantial illegitimate
profits and investing in many legitimate businesses. Boryokudan
have become increasingly active internationally, particularly
in global money-laundering operations and narcotics trafficking.
The Japanese National Police estimate Boryokudan earnings worldwide
to total $10 billion annually, a third of which comes from drug
trafficking activities. ...

The roots of the Boryokudan can be traced to the early 17th Century,
when there existed a lower class of independent samurai warriors.
These legendary figures have been the subject of many Japanese
stories, and as bandit heroes, can be likened to Robin Hood.

Boryokudan origins can be traced to two other groups which evolved
during the 18th and 19th Centuries - street peddlers and gambling
gangs. The street peddlers were organized into gangs with complex
organizational structures emphasizing total loyalty. The gambling
gangs were known as 'Bakuto.' Tattooing, which until recently
was widely popular among Boryokudan members, and finger-cutting
(the practice of cutting off a joint of the little finger as an
indication of remorse when an assigned task was not performed)
began with the bakuto, which also maintained some degree of secrecy
within each group. ...

In the 20th Century, expansion of Boryokudan activities corresponded
with the growth of the Japanese economy. Boryokudan entered into
a variety of businesses, most notably construction and transportation.
... Recently, there have been numerous publicly reported incidents
revealing the Boryokudan's involvement in public corruption which
have also involved major figures in industry and finance. ...

Over the past three decades, the Boryokudan have become immersed
in real estate development, company racketeering, and large-scale
loansharking. Much of their business activity is facilitated through
extortion, and Boryokudan leaders have often used strong-arm tactics
in business transactions of all sizes. ...

The success of Japanese criminal groups on the domestic front
has been facilitated by their being allowed to operate in the
open. Boryokudan have functioned largely as public corporations,
maintaining offices which display their group logo, and even carrying
business cards identifying their gang.

The Boryokudan, until recently, submitted membership lists to
the National Police Agency (NPA). While the Japanese police have
recently used the substantial intelligence base generated by these
lists to expand anti-Boryokudan efforts, a significant number
of Japanese police officers have traditionally held some degree
of respect for the gangsters. Breaking with past acceptance of
Boryokudan, on March 1, 1992, the Japanese Government began enforcement
of a new 'Boryokudan Countermeasures Law.' The Japanese Government
has also promulgated new money laundering statutes to go into
effect at the end of l992. ...

Over the last three decades, Japanese organized crime has expanded
overseas. While Japanese crime groups have been active in Korea
since the end of World War II, Boryokudan prostitution operations
in Korea greatly expanded in the 1970's. note#113
During that decade, the Boryokudan became deeply involved in the
international sex trade. Boryokudan-controlled prostitution, pornography,
and 'sex tour' operations stretched to Taiwan, the Philippines,
Thailand, and later to South America, Europe, and the United States.
Boryokudan members have recruited American women from Hawaii and
the West Coast into prostitution in Japan.

Boryokudan operations in the United States during recent years
have included gun running, drug trafficking, gambling, extortion
immigration fraud, securities violations, and money laundering.
...

Boryokudan gangs currently play a primary role in bringing crystal
methamphetamine, also known as 'ice,' into Hawaii, where it is
now regarded by law enforcement officials as the No. 1 drug problem.

Japanese criminal figures routinely visit Las Vegas, and to a
lesser extent, Atlantic City, on gambling junkets. Additionally,
Boryokudan members have been tied to illegal gambling operations
in the United States.

Boryokudan members have kept a low profile in extortion operations
in the United States. Although Boryokudan corporate extortionists,
known as sekoiya, made appearances at corporate board meetings
of such companies as BankAmerica and Chase Manhattan Bank in the
early 1980's, these 'visits' were of little consequence. No recent
attempts to strong-arm blue chip American firms have been documented.
Street-level extortion of businesses by Boryokudan has been reported
in Hawaii and Southern California in recent years, but such activity
has been minimal compared to the high level of Boryokudan extortion
operations in Japan.

Currently, U.S. law enforcement concern about Japanese crime groups
is primarily focused on money laundering. Numerous instances exist
where U.S. properties were purchased by individuals with alleged
Boryokudan ties. ... U.S. law enforcement authorities are convinced
that substantial sums of money are still being successfully laundered
in the United States.

6.2 The three largest boryokudan groups are the Yamaguchi-gumi,
the Inagawa-kai and the Sumiyoshi-kai which between them accounted
in 1992 for about half the total membership. The Yamaguchi-gumi,
headquartered in Kobe, is by far the largest group having (in
1992) 944 affiliate gangs and 26,200 yakuza under its command.
note#114 These gangs had been able to expand
through tribute payments from their affiliate gangs, without direct
involvement in the affiliates' illegal activities. note#115
In addition, most illegal activity in these gangs is not directed
from the top. In some respects the way the gangs operate on a
day-to-day basis resembles a pyramided franchise structure. Subordinates
make regular payments to the person ranking above them. In exchange,
they are allowed to use the name of the organisation to provide
the necessary fear and intimidation to support their own independently-organised
criminal activities. However, the whole gang is capable of operating
as a single unit controlled from the top if necessary - in response
to attacks on one of its members, for example. The higher levels
also have the ability to mediate turf disputes between competing
sub-units of the gang. note#116

6.3 The boryokudan countermeasures law referred to in the passage
quoted in paragraph 6.1 above does not make the yakuza gangs illegal
organisations as such. Instead it provides that gangs meeting
specific criteria, such as having more than a certain percentage
of membership who have criminal records, be designated as boryokudan.
note#117 Designation makes it harder for
a boryokudan to conduct business. The law prohibits designated
organisations from, for example, realising profits from subtle
forms extortion that were not specifically illegal under pre-existing
law, such as demands for payoffs from a restaurant in return for
'protection', without any explicit threat of reprisal in case
of refusal. In all the law bans eleven activities. Its effect
has been to deny the designated groups access to previously lucrative
sources of income. note#118

6.4 On one view, the effect of the 1992 law, the Japanese economic
recession and increasing public disapproval has been to make yakuza
members try to appear more legitimate: 'More and more gangs are
fighting the big freeze by turning away from traditional money
spinners such as drugs and gambling, and getting into more-or-less
legitimate lines of business instead'. note#119
A 1994 media report states that many yakuza groups have tried
to bypass the countermeasures law by re-incorporating themselves
as industrial, political and even religious groups. The Yamaguchi-gumi
has apparently re-established part of its organisation as the
National League to Purify the Land, a non-profit charity ostensibly
dedicated to stamping out drug abuse. The Sumiyoshi-kai, the second
largest gang, has become Hori Enterprises. The Inagawa-kai, the
third largest, is now Inagawa Industries. note#120
Some yakuza members, however, have apparently become increasingly
violent in Japan since 1992. The same 1994 media report states:

The upsurge in yakuza violence comes at a time when all the gangsters'
traditional lines of income have been falling. Loan-sharking,
gambling, drugs and brothels have all suffered steep falls in
business. Speculative golf clubs and property developments, in
which gangsters invested heavily, have collapsed. So have other
money-laundering operations and investments in the stock market.
Credit lines once easy to obtain from banks and brokers, are no
longer available as Japan enters a credit crunch; for the first
time overall bank lending contracted in June and July. Furthermore
after a series of scandals which linked top politicians and businessmen
with yakuza deals and helped bring down the government last year,
companies have been trying to clean up and sever connections with
the underworld.

6.5 The boryokudan
countermeasures law and the economic difficulties in Japan have
apparently led to some reduction in the total number yakuza members.
note#121 An April 1994 media report noted
this and stated: 'some police analysts believe that at this pace,
the number of gangs could be halved in another two years. Indeed,
a National Police Agency survey estimates that there were 53,000
gang members as of November 1993, some 10,000 fewer than a year
earlier.' note#122 Nonetheless, the numbers
involved are large when compared to Italian organised crime in
the United States for example. note#123
Apparently, as the numbers have dropped, the proportion in the
three largest groups has increased to about two-thirds of the
total yakuza. note#124 A recent media report
comments:

To law enforcement experts, the trend is clear. A leaner, meaner
underworld is in the making. 'They are streamlining, just like
the business world,' said a former prosecuting attorney who advises
company executives on how to protect themselves from gangsters.
'The weaker ones are being weeded out, and the stronger syndicates
are growing stronger.' ... Police acknowledge, however, that no
major gangs have gone out of business, no leading figures put
behind bars. The big three syndicates, the Yamaguchi-gumi, Inagawa-kai
and Sumiyoshi-kai, appear as stable as ever ... note#125

6.6 In discussion in Australia it is sometimes said that this
or that Japanese company has 'links' or 'associations' with the
yakuza. In the absence of more detail on the nature of the alleged
links or associations, such claims are not necessarily very meaningful,
because of the very pervasive involvement of the yakuza with Japanese
companies and the fact that until recently the yakuza were a tolerated
part of Japanese society. note#126 For
example, a 1994 media report stated:

Two in five Japanese companies have had connections to organised
crime, while 5 per cent still have links to the underworld, according
to a survey by national broadcaster NHK. Three hundred major companies
were surveyed after an executive of Sumitomo Bank was shot dead
on September 14 at his apartment. Responses were received from
205 companies. ... typical of links were the making of loans to
gangsters and the paying of extortion money to avoid violence,
sabotage or embarrassment at annual meetings. Forty-six companies,
or 22 per cent, said their executives had received threats from
mobsters - from shots into their homes to blackmail. note#127

Extent
of Activities in Australia

6.7 There have been many warnings from police sources since at
least the mid-1980s that Australia is, or risks becoming, a target
for yakuza groups. note#128 In 1993 a Japanese
National Police Agency analyst said: 'Our new anti-organised crime
law is not only driving the yakuza underground, but also overseas'.
note#129 In the same year a newspaper reported
that a leaked intelligence assessment, apparently compiled by
the Criminal Justice Commission, 'gives a warning Australia is
being infiltrated by significant Japanese organised crime'. note#130
More recently, in September 1994 the AFP stated that it 'has considerable
concerns about the possibility of organised crime interests in
Japan extending into Australia'. note#131

6.8 There have also since the mid 1980s been many claims of yakuza
activities in Australia. Although earlier visits were recorded,
it was from about the mid-1980s that visits to Australia by alleged
or admitted yakuza members began to attract the attention of law
enforcement agencies and the media. note#132
It seems there are no accurate statistics on the number of yakuza
visitors, although a media report stated in 1994 that 'the Australian
police are now identifying known yakuza members arriving in Australia
at a rate of about 40 a year'. note#133
This of course leaves open the number of visits by yakuza members
who were not identified as such. Since the Japanese crackdown
on the yakuza, many gang members are reported to have abandoned
their distinctive dress, hairstyles and mannerisms. This would
make them more difficult to detect easily at the customs barrier.

6.9 In most cases the ostensible reason for visits is recreation.
A 1994 media report stated: 'The biggest Japanese gang, the Yamaguchi-gumi,
maintains at least three corporate holiday villas on the Queensland
Gold Coast for members' recreational use'. note#134
Yakuza visits to legal casinos have been widely publicised, with
some of the visitors reported as bringing large amounts of cash
with them. note#135 There have been many
reports alleging that Australian's legal casinos are used by yakuza
visitors for money laundering purposes. note#136
The then Queensland Police Assistant Commissioner, Mr Neil Comrie,
was reported saying in 1991 that police were convinced that yakuza
members were not visiting Australia just to gamble. note#137
He also said that it was reasonable to assume that profits from
illegal yakuza activities in Japan had been invested in Queensland
real estate.

6.10 In March 1991 the Queensland Government was provided with
a Queensland Bureau of Criminal Intelligence report note#137A
on the extent of boryokudan infiltration into Queensland. The
report, with names and some other material deleted, was tabled
in the Queensland Parliament on 26 November 1992, and was incorporated
in the Senate Hansard on the same day. note#138
After a summary and some introductory material on the boryokudan,
the report continued by drawing a comparison between Queensland
and the position in Hawaii in the 1970s. The report said that
in Hawaii the Japanese purchased considerable legitimate businesses
worth hundreds of millions of dollars and that this was followed
closely by 'a criminal invasion by the Boryokudan'. The report
detailed the growth in Japanese tourism to Queensland, and the
increase in the number of resident Japanese. It continued: note#139

4. Intelligence investigations reveal there is presently business
practices of coercion amongst local Japanese businessmen involved
in the tourist industry. For example tour operators conveying
Japanese tourists to particular Japanese souvenir shops and in
turn receiving commission. In fact some souvenir shop owners have
approached the guides for their cooperation.

5. These practices are indicative of Boryokudan methods.

6. On 27 January 1991 three Japanese males entered an exclusive
leather shop in surfers Paradise and attempted to intimidate the
Japanese shop assistant to sell some leather goods at a greatly
reduced rate. When she refused the three Japanese males claimed
that they were Boryokudan (the principal had ornate body tattoos
and a missing joint on the little finger) and threatened to assault
the shop assistant and damage the shop. They subsequently left
without incident.

Gambling

1. There are no legal casinos in Japan hence there is a great
attraction to the Australian casinos.

2. Conrad Jupiters Casino staff regularly travel to Japan to invite
high rolling gamblers to their Casino and in return they pay for
their airfares to Australia and their accommodation and meals
at the Casino.

3. On many occasions when the Japanese gamble at Club Conrad (High
Rollers) Casino staff regularly increase the limit of bets at
the request of the Japanese even though this is in contravention
of Casino regulations.

4. A number of Boryokudan members have been identified as having
been invited to the Gold Coast by the Conrad Jupiters Casino.
They in turn gamble hundreds of thousands of dollars at Club Conrad.

5. As a result of information received The Task Force (BCI) conducted
surveillance in relation to the following person and his bodyguards.
xxxxxx born 211040 heads the Shino Gumi which is a subsidiary
of the SUMI YOSHI RENGO KAI organisation, the third largest Boryokudan
group in Japan. xxxxxx has visited Australia on six occasions
the past three occasions being paid for by Conrad Jupiters Casino.
On each occasion that xxxxxx visited Australia he was accompanied
by several associates (bodyguards) and had in his possession a
leather bag containing a reputed 1 million dollars.
During a number of evenings at Club Conrad xxxxxx was observed
by Casino staff to have a close association with xxxxxx born 250664,
a former Daikyo employee, who resides on the Gold Coast. On one
occasion xxxxxx was observed to give xxxxxx $80,000.00.

Property development

1. Japanese developers have targeted Queensland and in particular
the Gold Coast and this is in close comparison to that of Hawaii
in the 1970s.

2. United States law enforcement agencies now admit that they
should have devoted more time investigating the so called legitimate
developers. Queensland gained intelligence indicates that the
following companies and associates have been involved in suspect
business dealings.
Daikyo Kanko Company Ltd has been regularly reported as having
Boryokudan associations. They are by far the largest developers
on the Gold Coast. This bureau has not investigated Daikyo on
the Gold Coast, however lengthy inquiries were made concerning
Daikyo in the Cairns area.
Daikyo Cairns was the subject of an intelligence report to the
C.J.C. Indications of official corruption with members of the
Mulgrave Shire Council and intimidation of owners of tourist shops.
Shinko Australia P/L, intelligence indicates an involvement with
the Boryokudan in the Sanctuary Cove area.
Current intelligence indicates that Interdevelop Company Limited
has invested considerable sums of money on the Gold Coast for
Japanese businessmen.
xxxxxx born 010237 a resident of Japan who is the xxxxxx of this
company has been reported as being a Boryokudan member.
xxxxxx born 221265 who speaks fluent Japanese is one of the directors
of Interdevelop and a number of other companies owned by xxxxxx.

3. The Japanese investors use Australians as Directors of companies,
no doubt to disguise foreign ownership. To date a large number
of companies have been identified on the Gold Coast as having
Japanese interests. SEE ANNEXURE A note#140

4. With the large number of companies, with Japanese financial
backing, on the Gold Coast, particularly in the hospitality industry,
the way is open for the Boryokudan to legitimise tourist enterprises
to cover their main sources of revenue - drugs, prostitution,
gambling and extortion.

Recent confirmed Boryokudan visits

1. xxxxxx born 221229 in company with a number of other Japanese
visited the Gold Coast during December 1990 and January 1991.
He has also made a number of other visits to the Gold Coast.
An informant who is a personal confident to xxxxxx has identified
him as being a high ranking Boryokudan member and should be treated
with respect.
During xxxxxx previous visit to the xxxxxx Sheraton Mirage two
suitcases arrived prior to his arrival. Hotel staff believed that
one of the suitcases contained a large sum of money. When he did
arrive a large sum of money was placed in a safety deposit box.
When xxxxxx departed the two suit cases were left at the hotel
for collection. Hotel staff believed that the suitcases were delivered
and collected by a representative of Daikyo.
Also during this visit all bookings were made and paid for by
xxxxxx (Daikyo).
During xxxxxx visit in December 90 and January 91 he also placed
a sum of money believed to be approximately $1 million in a safety
deposit box at the Sheraton Mirage. When he left in January 91
the hotel gave him permission to leave the money in the safety
deposit box.

2. xxxxxx born 060965 arrived in Cairns in December 1990 in possession
of 70 million yen (A$700,000.00) claiming he was a process worker/chef.
There is no real evidence that would suggest that xxxxxx is a
member of the Boryokudan other than that he was arrogant and domineering
in his manner.
The following day xxxxxx collected xxxxxx born 030566 from the
international airport. xxxxxx address book was photocopied and
several names in the address book have been identified as persons
involved in the importation of illicit drugs.
And following this day xxxxxx (a known Boryokudan member) and
his minders arrived at the Cairns international airport. They
travelled to Darwin and were observed at the Darwin Casino. This
party then travelled to the Gold Coast and stayed at Conrad Jupiters
Casino. The inference is that the Boryokudan use couriers to transfer
money from Japan for laundering in Australia.

Money laundering

1. The NPA have stated that there is no legislation to counteract
money laundering within Japan. As previously mentioned there also
is no control over moneys leaving Japan.

2. The Australian Customs Service do not refuse entry to persons
with large amounts of money entering this country. xxxxxx is a
typical example in that he entered Australia via Cairns in possession
of 70 million yen and ACS officers simply recorded particulars
of the money.

3. Conrad Jupiters Casino in fact entices Japanese to come to
Australia, bringing with them large sums of money.

4. Intelligence suggests it is a recognised practice for Japanese
Nationals to launder money within this country.

6.11 Clearly some of the items in this ABCI report are not of
great weight, at least when taken isolation, as the Queensland
Premier, Mr Goss, pointed out. note#141
Also the report has to be read for what it is - intelligence and
allegations based on a variety of sources of varying quality and
reliability, rather than information proven in court proceedings.
Subsequent investigations failed to confirm some of the suggestions
in the report, such as the suggestion that yakuza were involved
in the commission arrangements by which tour guides brought Japanese
tour groups to particular shops and tourist venues and intimidation
of local businesses. Claims relating to casinos, and to money
laundering generally are examined in paragraph 6.31 below.

6.12 In 1992, there were further claims that the Japanese company,
Daikyo, had yakuza associations. note#142
Daikyo was at one stage a shareholder in Jupiters Casino on the
Gold Coast and was part of a consortium interested in bidding
for a licence to operate a casino in Brisbane. It also has other
tourism-related interests in Queensland. The claims were strongly
denied by Daikyo. The Queensland Premier said that the yakuza
links to Daikyo were not established. note#143
Also in 1992, the AFP was reported to be investigating several
yakuza-related claims, including one that the yakuza were seeking
permits to build and operate casinos in Australia and another
alleging yakuza involvement in a northern New South Wales property
development. note#144

6.13 In 1993
it emerged that Mr Masaru Takumi, second in charge of the Yamaguchi-gumi
yakuza group, was a frequent visitor to Australia and a company
he owned had bought a penthouse on the Gold Coast. The Minister
for Immigration subsequently cancelled Mr Takumi's visitor's visa
on the basis of his admitted membership of the Yamaguchi-gumi.
note#145 In the publicity surrounding this
case a newspaper reported that a Japanese businessman had lost
a large sum to another Japanese businessman on the Gold Coast
in 1992 in a 'shonky business deal'. The businessman said he had
no difficulty hiring 'a local yakuza enforcer' to get his money
back. note#146

6.14 Some yakuza members have been deported from Australia because
they failed to disclose their criminal records when applying for
visitor visas. In some cases these visitors have apparently had
large sums of cash in their possession. For example, according
to a media report a group of three deported in November 1991 had
more than $500,000 in Australian currency in their possession,
which they were allowed to take with them because Australian officials
could not prove that they had obtained it illegally. note#147
The AFP's Annual Report 1991-92, p. 22 stated:

Several Japanese Yakuza members and gang leaders have been identified
as having visited Australia. A number of Yakuza members were detected
violating immigration laws - mainly through failing to declare
their past criminal records when applying for visas - and in co-operation
with the Department of Immigration, Local Government and Ethnic
Affairs, AFP officers 'supervised' their departure from Australia.

6.15 In May 1991 Mr Sueharu Suzuki was deported for failure to
disclose his criminal convictions when applying for his entry
visa. He apparently admitted that he was a former yakuza member.
note#148 It seems he had visited Queensland
for two years before his arrest and had, through companies, purchased
properties in several parts of the State, one of which he said
he was planning to develop into a rural retreat for the staff
of his car dealership in Tokyo. note#149

6.16 In 1991, a yakuza visitor was successfully prosecuted under
the Cash Transaction Reports Act 1988 for failing to declare
that he was carrying more than $5,000 when attempting to leave
Australia via Brisbane Airport for Japan. The person involved,
Mr Chun Yong, was a Korean national said to be the leader of a
yakuza gang called the Toa Yuai Jigyo Kumiai, and he had an extensive
criminal record. He was reported to have had $155,000 in his possession
when he arrived, and was attempting to leave with $68,000 in yen
and Australian dollars. note#150

6.17 The Australian Federal Police Annual Report 1992-93,
p. 29 stated that inquiries into Japanese organised crime in Australia
indicated that an Australian and a Japanese national were allegedly
involved in a fraudulent migration scheme to qualify Japanese
investors under the Business Migration Scheme. A total of $8 million
was apparently lost by several Japanese businessmen in the scheme.
However, the annual report makes no explicit reference to any
yakuza involvement. There are other cases where a Japanese living
in Australia has allegedly attempted to defraud visiting Japanese,
but there has apparently been no evidence of any yakuza involvement
in these cases.

6.18 On 21 March 1994 the Australian Financial Review reported:

Japan's organised crime syndicates are moving into Australian
industry and targeting legitimate companies as a crackdown on
the gangs at home sends them looking for new opportunities abroad.

The Federal Police have recently opened five separate and substantial
investigations into yakuza investment and crime in Australia.
Four of these involve attempts to either invest in, or extort
money from, legitimate businesses and business people operating
in Australia.

There are indications that a Japanese syndicate is attempting
to buy into an established Australian export industry to provide
the conduit and cover for a major international drug trans-shipment
route. ...

From what the Australian authorities have been able to uncover
of the gangs' activities, they are now investigating:

An attempt by a syndicate to make a sizeable corporate investment
in an established Australian industry which exports to Japan,
apparently with the intention of using the trade to ship drugs
into the Japanese market;

Intimidation and extortion of Japanese companies and business-people
operating in Australia;

Japanese gangs' moves to enter the construction industry in
Australia, including sophisticated efforts to extort information
about bidding for particular projects;

Signs of systematic defrauding of Japanese individuals and
businesses in Australia;

Evidence of an emerging partnership in Australia between some
yakuza groups and Hong Kong-based Triad gangs. ... note#151

6.19 In June 1992 seven Japanese, ostensibly tourists, were arrested
on arrival at Melbourne airport from Malaysia when their luggage
was found to contain 12 kilograms of heroin. Five of them, and
a Malaysian national, were subsequently convicted and sentenced
to terms totalling 105 years of imprisonment. One of those convicted
was the leader of the tourist group, Yoshio Katsuno, who was sentenced
to 25 years' imprisonment. One media report identified him as
a 'former member' of the yakuza. note#152
Another said that Katsuno 'had been identified as a mid-level
member of a Tokyo cell' of the yakuza. note#153
However, there was no suggestion that the yakuza had organised
the importation. Rather the reports seems to suggest an ethnic-Chinese
group based in Malaysia was the organiser. One media report described
the case as 'the only known arrest which involved elements of
... the Yakuza in a South East Asian drug syndicate'. note#154

6.20 Finally in this collation of reports of yakuza activity in
Australia, the Queensland Criminal Justice Commission has reportedly
investigated claims that recruitment of Australians to work in
Japan may be connected with yakuza-linked organised prostitution
in Japan. note#155 According to a media
story based on a leaked CJC report, 'A member of the political
staff of the Australian embassy in Japan has confirmed Australian
women are being recruited for the Japanese sex industry after
their passports were taken by Yakuza members'. note#156

How Real is the Threat from the Yakuza?

6.21 A fair summary of the above would be that there is clear
evidence of recreational visits by yakuza gang members, some of
which have involved false statements about criminal antecedents
in order to obtain the necessary visa, and at least one of which
involved a breach of cash reporting law. There is evidence of
some relatively minor real estate investments by yakuza-related
companies, but these investments are not in themselves illegal.
There are many other claims and allegations, as the preceding
paragraphs have indicated, but there appears to be no hard direct
evidence of illegal activity by yakuza gangs in Australia. note#157

6.22 In August 1990 the Director of Intelligence at the Queensland
Criminal Justice Commission, Mr Jack Morris, was asked what evidence
it had that yakuza principals had infiltrated Queensland and were
involved in organised criminal activities. He responded by saying
that 'we really have no hard evidence that would point to it,
except that some overt or open source people have told us that
they have seen them, and that they have visited different areas
of the State, and I'm talking about a very small number [that]
have been observed'. note#158 The Queensland
Tourism Minister, Mr Gibbs, said in 1991: 'I am concerned about
the fantasy that some people have suddenly developed about the
Yakuza. If the Yakuza operate in this State ... nobody ... would
support more thoroughly than myself a full investigation ... I
understand that there is no proof that that is happening. There
is suspicion of it, but there is no proof.' note#159

6.23 In 1992, the Committee raised a current media report note#160
about yakuza infiltration into Australia with the National Crime
Authority. The response included a note of caution from Authority
Member Malcolm Gray, QC:

One of the problems about this area is that a lot of it is anecdotal.
Indeed, if you read that article it is really more anecdotal than
based on any specific instance. The mere fact that a person is
Japanese and that he buys property does not make him a member
of the Yakuza or imply that there is a Yakuza takeover of property,
particularly in Queensland.

I just make that as an observation because it is a little bit
like Chinese and Triads, or Italians and the Mafia. There is a
tendency to associate the ethnic group with the criminal element
within that ethnic group without necessarily there being any justification
for doing so.

Mr Cusack [a Member of the Authority] - The AFP had a report
on the Yakuza. At that stage, although they were still investigating
it, the AFP could show no link between people buying property
on the Gold Coast and the Yakuza, as was being alleged. There
are members of the Yakuza who are coming into Australia, they
can show that, but as regards any links, so far that has not been
achieved.

Senator JONES - There have been a number of reports, and
not just this one, about the purchase of property. There have
also been a number of reports in relation to the Yakuza and child
prostitution. note#161 Those sorts of reports
have been coming through too.

Mr Sherman - It is something we cannot take for granted.
I agree with everything Mr Gray has said and we will keep an eye
on it. ... note#162

6.24 In written answers in October 1992 to questions asked in
the Senate, the then Minister for Justice, Senator Tate, said
that the AFP was not aware of any evidence which would support
the suggestion that the Queensland tourist industry was being
used to launder profits from Japanese criminal activity. Nor did
the AFP have any evidence to support the claim that the yakuza's
penetration of the Queensland property market could be well above
25 per cent. note#163

6.25 A media report in May 1993 noted: 'Australia's law enforcement
agencies believe that the Yakuza have not moved into Australia
in a big way. They believe that most identified Yakuza who visit
are here for a holiday and nothing else.' note#164
Two criminologists, Paul Wilson and Phil Dickie, expressed the
view in a paper published in 1993 that there was:

no compelling evidence of widespread Japanese involvement in traditional
criminal activities in Queensland; however, there is a legitimate
concern over the potential for illegally sourced incoming investment
flows to produce local and regional economic and social distortions.
It appears that what law enforcement agencies and governments
need to do in relation to the Yakusa 'threat' is to be more sure
of where money for such things as tourism development come from.
note#165

6.26 The section of the Report of the Review of Commonwealth
Law Enforcement Arrangements dealing specifically with the
yakuza suggests that yakuza groups are not currently operating
here. The Report notes that historically in Japan the yakuza were
to some degree a tolerated part of society and comments:

4.79 Since 1991, however, there has been a major government push
against these groups. Armed with new anti-gang laws, Japanese
authorities have been mounting successful operations against Yakuza
groups and their leaders. While law enforcement agencies have
known of recreational visits to Australia by Yakuza members
for much of the past decade, the Japanese Government initiative
may eventually cause Yakuza members to try to establish
themselves in this country. Yakuza groups may see Australia
as a place where they could recoup some of the profits lost in
Japan.

4.80 A number of AFP investigations have revealed the presence
in Australia of Yakuza members.

4.81 As with the Colombian syndicates, the resources available
to the Yakuza groups would make them difficult for Australian
law enforcement agencies to counteract if they established
a presence here. (emphasis added)

6.27 The absence of a large, geographically-concentrated, Japanese
community in Australia makes it less easy for yakuza to prey on
Japanese here, in the way that Vietnamese and Chinese criminals
have been said to prey on their (larger) respective ethnic communities
in Australia. In addition, the close interest taken in yakuza
visitors by Australian law enforcement agencies, and the attendant
media publicity, may have discouraged visiting yakuza from seeing
Australia as anything more than a holiday destination.

6.28 It has been pointed out that most yakuza cannot speak English,
and that this provides a considerable barrier to their gaining
a foothold in Australia. note#166 On the
other hand, the language barrier also poses difficulties for Australian
law enforcement agencies trying to investigate alleged yakuza
activities: the use of standard techniques for investigating organised
criminal activity, such as undercover investigators, infiltration
techniques and telecommunication interception and electronic eavesdropping,
all become more difficult.

6.29 The view was noted above that the economic slow-down in Japan,
combined with the boryokudan countermeasures law, would push the
yakuza overseas to places such as Australia. However, another
view is that the chance of a concerted push by yakuza gangs into
Australia has dropped sharply as a result of the changed economic
climate in Japan. note#167 If the main
interest of the yakuza in Australia to date has been the investment
and laundering of profits, there is some logic is believing that
the interest would decline as yakuza profits in Japan declined.
If the number of media reports about alleged yakuza activities
in Australia is any guide, there has been a marked reduction in
the last year or so.

6.30 There are no reported cases in Australia of violence by yakuza
groups, or of yakuza-organised drug trafficking into Australia.
Nor have there been any reported prosecutions for yakuza-related
extortion or any reports identifying specific companies on the
receiving end of the sort of corporate blackmail which has been
a noted feature of yakuza activity in Japan. note#168
There have been no proven cases of corruption of politicians or
public office holders in Australia by yakuza. Apart from the false
visa application cases and the failure to declare cash at the
customs barrier, there have not been any media reports of arrests
or convictions of yakuza members in Australia. There is manifestly
a close media interest in anything relating to the yakuza that
occurs in Australia. It is fair to assume from this, that had
there been any arrests or prosecutions in cases with clear or
even peripheral yakuza involvement, they would have received publicity.

6.31 Claims
that yakuza members were visiting Australian casinos in the early
1990s to launder money must be read in the light of the NCA's
1991 investigation into money laundering generally. This found
'no known cases whereby casinos were used to conceal the origin
of criminal funds'. note#169 The popular
view that legal casinos provide a ready means to launder money
is simply not correct. note#170 Monitoring
of Mr Masaru Takumi (referred to in paragraph 6.13 above)
revealed no evidence of his participation in casino gambling that
could lead to money laundering. It did reveal that his wife had
lost about $10,000 at Jupiters Casino. note#171

6.32 The NCA's investigation also noted the claims that real estate
was used to launder the proceeds of overseas crimes. On this point,
the study found: 'There are, however, only a very few confirmed
cases which document the laundering or investment of proceeds
of crime generated overseas in Australia'. note#172
The study did note, however, the need for better information on
the proceeds of crime that might be entering Australia. note#173

6.33 It was also said in 1991 that there was no logical reason
why yakuza members would want to come to Australia to try to launder
money, given that there were at the time no restrictions on money
exchanges in Japan. note#174 The relative
sophistication of Australian measures for the detection of money
laundering must surely lessen Australia's attractiveness for this
purpose. The presence of strong Australian legislation against
money laundering makes it risky for overseas criminal groups to
use this country. There are still many other countries in which
money laundering is not a crime, or where few measures are in
place to detect it.

6.34 Although not involving the yakuza, the Law and Chun case
illustrates the risk of confiscation for those investing the proceeds
of overseas criminal activity in Australia. note#175
Law Kin Man is alleged to have made profits of at least US$100
million in the late 1980s by smuggling heroin from south east
Asia into the United States. He is currently in custody there
awaiting trial, after having been arrested in Hong Kong in 1989
and extradited to the United States in 1992. His profits from
the United States were moved to Hong Kong. From Hong Kong, some
A$23 million was sent to Australia and invested in real estate
by Law's wife, Deborah Chun, at his direction. She had been an
Australian resident since 1983. On receiving information from
the Hong Kong authorities, the NCA had taken an interest in her
activities and discovered the real estate purchases. Action under
the Proceeds of Crime Act 1987 was taken against Chun and the
family company she controlled. Both pleaded guilty. In September
1983, the Director of Public Prosecutions (DPP) obtained forfeiture
orders in relation to $1,440,025 in cash and real estate valued
at $4,050,000. In addition, the DPP obtained pecuniary penalty
orders against Chun and her company totalling over $10 million.
As at 30 June 1994, some $8.9 million had been recovered and paid
into the Confiscated Assets Trust Fund.

6.35 The success in the Law and Chun case was attributable in
considerable measure to the close cooperation between Australian,
Hong Kong and United States authorities. However, close international
cooperation is not always possible, and the absence of any proven
cases of investment of yakuza money in Australia does not mean
that no cases have occurred. Australian investigators have difficulty
in verifying the source of funds coming from Japan so as to determine
if they are the proceeds of crime. United States investigators
have experienced similar difficulties, as a recent report noted:

Despite the fact that Japanese organized crime groups are believed
to have invested hundreds of millions of dollars of profits from
their criminal enterprises in U.S. real estate during the past
decade, U.S. law enforcement authorities have had almost no success
in dealing with this problem. The reasons are twofold: First,
U.S. officials face almost insurmountable difficulties in tracing
the source of Japanese funds used to purchase U.S. properties;
second even if such information is obtained, loopholes in current
U.S. law on money laundering make successful prosecution unlikely.
note#176

6.36 Apart from the inherent difficulties in following money trails
in foreign countries, Japanese privacy law limits the ability
of its police to provide information on Japanese citizens to foreign
law enforcement agencies. It seems that in at least two instances
yakuza members or associates have sued the National Police Agency
for releasing information to United States officials. note#177
Information may only be provided if there is a suspicion that
a specific crime has been committed. Moreover, the crime must
involve an act that, if committed in Japan, would be illegal under
Japanese law. note#178 As noted above,
yakuza membership per se is not a crime in Japan. Because
Japanese money laundering law covers only the profits of drug
trafficking, Japanese agencies will only cooperate in trying to
identify a source of suspect funds in drug trafficking cases.
As noted above, much of the yakuza gangs' income comes from non-drug
activities.

111. Ya-Ku-Sa is the number 8-9-3 in Japanese and is a losing
hand in a popular Japanese card game. Thus, Yakuza translates
roughly to "loser". The Boryokudan have cultivated their
"underdog" image over the years and have used it to
elicit a degree of sympathy from the Japanese public. (footnote
in original)

113. A Federal Bureau of Investigation officer told a United States
Senate subcommittee hearing in 1991: "You have to understand
that ethnic Koreans make up 15 percent of the Boryokudan in Japan
so the relationship between the two countries and the criminal
element is very close at this time". See Permanent Subcommittee
on Investigations of the Committee on Governmental Affairs, Asian
Organized Crime, Hearing, 3 October 1991 (US Gov. Printing
Office, Washington, DC, 1992), p. 21. (footnote added)

116. See the organisation chart of the Yamaguchi-gumi in "Clash
of loyalties: complex structure makes for loose control",
Far Eastern Economic Review, 21 November 1991, p. 30 and
the accompanying description.

117. The legislation contains a formula under which the percentage
varies according to the size of the gang. For an organisation
of 50-54 people, it is 12 per cent: "Legal conduct: New laws
unlikely to curb Yakuza", Far Eastern Economic Review,
21 November 1991, p. 34. For a 1,000-member gang the percentage
is 4.11 per cent, and for a 3 or 4 member gang it is 66.67 per
cent: "Japan's yakuza mobsters gun down bankers", Sunday
Times (London), 25 September 1994, section 2, p. 9. The formula
is said in practice to favour larger gangs, who find it easier
to retire the necessary number of members with criminal records.

118. This paragraph is largely based on Inami Shinnosuke, "Going
After the Yakuza", Japan Quarterly, July-September
1992, pp. 354, 356.

121. Gang membership had in any event been declining. It peaked
in 1963 at 184,000 members: United States Senate, Permanent Subcommittee
on Investigations of the Committee on Governmental Affairs, The
New International Criminal and Asian Organized Crime, Report,
December 1992 (US Gov. Printing Office, Washington, DC, 1993),
p. 18.

122. "Yakuza Storming the Corporate Ship", Tokyo
Business Today, vol. 62, no. 4, April 1994, p. 46. A 1993
source stated: "Although there are fewer official gang members
now - 56,000 compared to 63,800 a year ago - the total number
of people associated with gang groups has held steady at around
90,600": see "Underworld Mergers: Hard times force yakuza
gangs to pool resources", Far Eastern Economic Review,
12 August 1993, p. 19.

123. See "Crime Shoguns under siege", Sydney Morning
Herald, 19 May 1993, p. 15 where figures of 56,600 full-time
and 34,000 'associate' or part-time yakuza members in 3,490 gangs
are given: "by comparison, at its height in America, the
Mafia is reckoned to have had no more than 5,000 full-time members
in 24 'families'".

126. See "Feeding on the system: Gangsters play increasing
role in business and politics", Far Eastern Economic Review,
21 November 1991, pp. 28-30, which emphasises the two-way relationship
between yakuza and legitimate business, such as real estate developers
using yakuza to induce recalcitrant land owners and tenants to
vacate land targeted for development, and banks using yakuza to
assist with non-performing loans.

131. Australian Federal Police, "Submission to the Joint
Standing Committee on Migration Inquiry into Australia's Visa
System for Visitors", September 1994, p. 3.

132. See for example, "Japan's organised crime sets sights
on Australia", The Age, 17 June 1987, p. 5: "Police
have already identified a series of visits by at least six members
of the hierarchy of the Yakuza gangs".

135. See for example, "Yakuza members visited NT casino",
West Australian, 17 January 1991, p. 12 (group of 14 Japanese
gamblers lost about $1m at Burswood Casino and a group of three
lost $200,000 at the Darwin Casino); "Japanese crime chiefs
'enticed' to Qld casino", Advertiser, 8 March 1991,
p. 12 (alleged yakuza boss accompanied by bodyguards had an estimated
$1m in cash in his possession during each of several casino visits);
"Japanese residents questioned in crusade against crime bosses",
Australian, 28 December 1993, p. 3 ($700,000 used by yakuza
visitor to buy gambling chips, which were allegedly cashed for
the entire amount the next day).

139. To conserve space, the section on drugs in this ABCI report
has not been reproduced, as it contains no claims or information
on yakuza drug-related activity in Australia.

140. The Annexure was not included with the document incorporated
in the Senate Hansard.

141. It seems that the basis of the claim of intimidation was,
in part, no more than "the assertion that a particular Japanese
visitor was believed to be a member of the Yakuza because he behaved
in an arrogant fashion whilst in a certain shop": Queensland,
Legislative Assembly, Parliamentary Debates, 26 November
1992, p. 1071.

146. "Yakuza on mission to find prey", West Australian,
15 May 1993, p. 7. See also "Rich Japanese hit by scam",
Gold Coast Bulletin, 22 July 1992, pp. 1, 2 for another
report of what appears to be the same incident.

154. ibid. An earlier media report stated that "The
AFP has already cracked a joint Yakuza/Triad narcotics ring in
Melbourne" but gave no further details: "Call to corral
Yakuza gangs", Sun-Herald, 21 November 1993, p. 3.
It seems this may be a (somewhat overstated) reference to the
Katsuno case.

157. The Committee has seen additional confidential material on
alleged yakuza activities in Australia. This material contains
reports of yakuza visits and allegations of yakuza activity in
Australia that have not been reported in the media. However the
material is similar in kind to that which has been publicly reported.
It therefore provides no basis for reaching different conclusions
to those which can be reached from the publicly available material.

160. "Probe to reveal Asian gangs" and "Dealing
with the low hands", both in Courier-Mail, 23 April
1992.

161. For a claim that yakuza members, operating individually and
not as a group, were involved in recruiting under-age girls to
work as prostitutes catering to visiting Japanese on the Gold
Coast see a story carried by Australian Associated Press's on-line
news service on 13 February 1992, "Yakuza men run child brothels
on Gold Coast: Lifeline man". The story provided no evidence
to support the claim that any of the Japanese said to be involved
were yakuza members.

166. "Yakuza: why we should fear the Japanese mafia",
Herald-Sun, 11 May 1991, p. 13.

167. See "Police curtail watch on yakuza", Australian,
20 February 1993, p. 3, where this view is attributed to "some
officials".

168. Compare the unsuccessful attempts at this sort of activity
against United States corporations in the early 1980s: see the
quote in para. 6.1 above.

169. National Crime Authority, Taken to the Cleaners: Money
Laundering in Australia, vol. 1, December 1991, p. 52. The
Queensland Criminal Justice Commission in 1993 withdrew suggestions
it made in an August 1991 CJC report that Jupiters Casino on the
Gold Coast was used by criminals to launder money: "CJC to
apologise for blunder over casino 'crime link'", Weekend
Australian, 3-4 April 1993, p. 5.

170. Although the detailed procedures vary from casino to casino,
no Australian casino will issue a cheque marked 'winnings' unless
it is convinced from the observations of its staff and its own
accounting records that the sum in question was indeed won. A
gambler may change a large amount of cash into gambling chips.
However, the casino will only exchange these chips back again
for either cash or a cheque marked 'non-winnings'. In addition,
casinos are subject to the Financial Transaction Reports Act
1988. Under this Act, they are required to report cash transactions
of $10,000 or more (whether in Australian or foreign currency)
and to report 'suspect transactions' as defined in the Act.

176. United States Senate, Permanent Subcommittee on Investigations
of the Committee on Governmental Affairs, The New International
Criminal and Asian Organized Crime, Report, December 1992
(US Gov. Printing Office, Washington, DC, 1993), p. 39.